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WTF is Social Enterprise?!

Social entrepreneurship is entering the mainstream and social enterprises are attracting a growing amount of resources. However, given the various ways in which social impact can be generated through the market, there is no ‘typical’ form of social enterprise and no single globally agreed-upon definition.

While sidestepping a definition creates a diverse and inclusive environment, it also puts the value and meaning of social enterprise at risk of being co-opted and misused – much like sustainability, CSR and triple bottom line.

In general, a social enterprise is an organisation that applies commercial strategies to maximise social impact rather than profits. Yet government and non-government organisations, academics and practitioners use a variety of specific characteristics to describe it. Although there are some common themes, everyone seems to have a different definition of what social enterprise means – below are just a few.

Do they help develop a better understanding of the role and scope of social enterprise? Do they bring some clarity to the discussion? Or do the range of alternative definitions dilute the term ‘social enterprise’ and leave it open to abuse?

“A social enterprise is an organisation that applies commercial and business strategies and trades in a marketplace of goods and/or services to fund activities that improve the community’s well-being. There is no legal definition but it is generally agreed that at least 51% of the equity of a social enterprise is comprised of “social” equity, which means those that provide equity capital for it on that basis are only seeking a social return when they provide it.” – School for Social Entrepreneurs Australia

“A social enterprise is a business created to further a social purpose in a financially sustainable way.” – NESsT

“A social enterprise is a business venture that trades to achieve a social outcome and generate enough income to cover its running costs. While these businesses operate like any other, aspiring to the highest commercial and service standards, difference in that serving the community is their priority.” – Mission Australia

“A social enterprise is a cause-driven business, whose primary reason for being is to improve social objectives and serve the common good.” – The Good Trade

“A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the ‘social mission’.” – Social Enterprise UK

“Social enterprises are businesses owned by nonprofit organizations, that are directly involved in the production and/or selling of goods and services for the blended purpose of generating income and achieving social, cultural, and/or environmental aims. Social enterprises are one more tool for non-profits to use to meet their mission to contribute to healthy communities.” – Social Enterprise Council of Canada

“A social enterprise is an organization or initiative that marries the social mission of a non-profit or government program with the market-driven approach of a business.” – Social Enterprise Alliance USA

“A social enterprise is a business whose mission operates for the public or community’s benefit and where the majority of the profits are reinvested. But at the end of the day, it’s about improving society or the environment instead of maximising profits.” – Reana McCourt, Good On You

“A social enterprise is a commercially viable business with a purpose of generating social impact. Their aim is to tackle social problems through improving communities, people’s quality of life or the environment. Profit made from the sale of goods and/or services in the open market is then reinvested back into the business or local community initiatives, instead of to shareholders.”– Power Parcel

“A social enterprise is a business that trades to tackle social problems, improve communities, people’s life chances or the environment. Although this might sound like a charity but social enterprises are not charities, they make profits from trade like any other business. In other words, the combination of doing business and doing good form the fundamental of a social enterprise.” – Supply Shack

“Social enterprise (n.): a business that directly addresses a social need either through its products and services or through the people it employs.” – Social Enterprise Cincy

“A social enterprise is a business with social objectives. Profits are reinvested in the business or the community, instead of being diverted to shareholders and owners. Like other businesses, social enterprises must sustain their business and make profits. The difference is the amount of profit that must be made and what is done with the profit.” – Business Wales

“A social enterprise is an organisation that makes intentional positive social or environmental impacts using a sustainable business model.” – The Difference Incubator

“Social enterprise is a business that, rather than focused on making money, tries to address a social problem. It has a double bottom line — to be financially sustainable, and to have a measurable impact on a societal issues such as poverty, health, the environment, human rights, and social justice.” – The Social Enterprise Podcast

“A social enterprise is a businesses that uses the marketplace to create an impact. A social enterprise is an organisation that makes intentional positive social or environmental impacts using a sustainable business model. It can be a for-profit or not-for-profit. Essentially it performs trade (sell services or goods) and is sustainable (generates revenue to cover their costs and expand).” – Deakin SeCo

“A social enterprise is a business with primarily social objectives. Its surpluses are principally reinvested for that purpose in the business or in the community, rather than striving to maximise profit and owner/shareholder value. They differ from registered charities in that they expect to be revenue generating from the service they provide, although this income may well need to be supplemented by other sources of funding.” – KnowHow

Which definition do you think ‘best’ describes the nature and qualities of social enterprise?

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WTF is Social Enterprise?!

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16 comments

Jay – Thanks for this post! We did something similar awhile back looking at the various names for organizations doing good. Articles like yours draw needed attention to the question of how we use terms like “social enterprise” and whether we’re saying the same thing.

A few years ago I mapped out all the definitions being used by infrastructure and research bodies throughout the UK and Europe.

Where they all seemed to overlap was in having a common set of identifiable features that define a social enterprise:

1) trading to achieve a social purpose
2) majority of profits are reinvested or gifted to further the social purpose
3) assets aquired are ‘locked’ – they can only be used in pursuit of the social purpose and not be sold for private gain

I found this a useful clarification to cut through hype and spin about legal forms, status, and governance models

[…] If the term ‘social enterprise’ is new to you, or if you’re still trying to decipher exactly what it means, rest assured you’re not alone. There is no ‘typical’ form of social enterprise and no single, globally agreed-upon definition. […]

[…] If the term ‘social enterprise’ is new to you, or if you’re still trying to decipher exactly what it means, rest assured you’re not alone. There is no ‘typical’ form of social enterprise and no single, globally agreed-upon definition. […]

[…] If the term ‘social enterprise’ is new to you, or if you’re still trying to decipher exactly what it means, rest assured you’re not alone. There is no ‘typical’ form of social enterprise and no single, globally agreed-upon definition. […]

It would be useful if the concept of “social enterprise” could be applied to a range of different businesses to guage the extent to which they are concerned with social good (just like a gender-based impact analysis can be applied widely and not just to organisations specifically concerned with women’s issues).